Is this charge for upi transactions : Customers Won't Pay 1.1% Fee for UPI Transactions Above ₹2,000

Is this charge for upi transactions

Unified Payments Interface (UPI) is quickly gaining popularity as one of the most popular digital transaction methods in India. Many apps provide this facility to users, and several banks have partnered with UPI, enabling customers to use this platform via bank apps. Numerous chat platforms and mobile wallets in the market also offer UPI services.

What is UPI?

UPI is a digital payment system that enables users to send and receive money via a Virtual Payment Address (VPA). The funds are directly debited from the customer's bank account.

List of Apps with UPI Feature in India:

Several apps provide the UPI feature in India, including PhonePe, Paytm, BHIM app, MobiKwik, Google Pay, Uber, Chillr, Paytm Payments Bank, SBI Pay, iMobile, Axis Pay, and Bank of Baroda (BOB) UPI.

If you frequently use UPI for your everyday transactions, there is some crucial information that you should be aware of. The National Payments Corporation of India (NPCI) has decided to implement an interchange fee on UPI transactions from April 1. Here is what you need to know.

As per a not-so-public circular released by NPCI (via Economic Times), a fee will be charged on merchant UPI transactions made through Prepaid Payment Instruments (PPI), which includes options like Amazon Pay, Bajaj Finserv, and mobile wallets. A 1.1% fee will be levied on transactions above Rs 2,000, with no charges applicable for anything below that. However, the fee structure will vary for different industries, with a lower fee of 0.5% for fuel purchases, 0.7% for agriculture, education, telecom needs, etc.

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NPCI has clarified that the fee will not be payable by users, and it won't be applicable to peer-to-peer (P2P) and peer-to-merchant (P2M) transactions. It has been revealed that the issuer of PPI will have to include 15 bps as a service charge for loading the wallet with Rs 2,000, payable to the account holder's bank.

Until now, there was no merchant discount rate (MDR) for UPI transactions, and everything was free. This new change has been brought in after NPCI required merchants to enhance UPI's interoperability and accept UPI payments through any UPI app or QR code by September 30.

The NPCI will review the change on September 30 to evaluate its impact. However, this new development may not be welcomed by merchants. We will keep you updated with further details. Please share your thoughts in the comments below. Stay tuned for more information.

UPI Facilitated 2,348 Transactions per Second in 2022

The year 2022 was highly successful for India's digital payment system, Unified Payments Interface (UPI), as it witnessed remarkable growth in both transaction count and total value. As per the National Payments Corporation of India (NCPI), the total UPI transaction value stood at INR 125.95 Lakh Cr at the end of 2022, marking a YoY increase of 1.75 times. This value accounted for almost 86% of India's GDP in FY22.

Furthermore, India witnessed a total of 7,404.45 Cr UPI transactions in 2022, marking a YoY increase of 1.91 times. The number translates to almost 2,348 UPI transactions per second. During the first quarter of the year (between January and March), the UPI network recorded a surge of 1.99 times in transaction count and a 1.92 times jump in transaction value as compared to the same period in the previous year.

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In the second quarter of 2022, the number of UPI transactions increased by 2.17 times YoY to reach 1,740.10 Cr. Meanwhile, the transaction value surged by 1.98 times YoY to reach INR 30.39 Lakh Cr. However, the second half of the year witnessed a slowdown in UPI growth. While the growth remained flat QoQ in the third quarter, the fourth quarter witnessed a decline in the growth rate of transaction value and count.

Between October and December, the UPI transaction value stood at INR 36.84 Lakh Cr, marking a YoY increase of 1.55 times. Similarly, the UPI transaction count was up by 1.73 times YoY at 2,244.44 Cr. Experts suggest that a slowdown in the growth of UPI transaction value and count indicates that the digital payment ecosystem is maturing, which is a positive sign.

Meanwhile, the average transaction value on the network experienced a slight decline in 2022, falling from INR 1,855 in 2021 to INR 1,711 in 2022. The decline indicates that more users made small-ticket transactions (under INR 500) in 2022 than in 2021. In December 2022, 3.24% of total person-to-person (P2P) transactions and 14.57% of person-to-merchant (P2M) payments were under INR 500. The increase in the number of smaller transactions was more noticeable in P2M transactions, indicating that more small merchants are using UPI.